Stay Home, Cut The Chatter

June 09, 1994|By Bloomberg Business News

CHARLOTTE, N.C. -- NationsBank Corp. Chairman Hugh McColl Jr. has told employees to travel less, use fewer paper clips and keep telephone calls short as part of a plan to slash overhead by $100 million by 1995.

In the current issue of the employee newsletter, Mr. McColl said travel cost the Charlotte, N.C., banking company $81 million last year, while office supplies cost $67 million, long-distance calls cost $19 million and overnight mail cost $9 million.

"You know those cute little Post-It stickers everybody likes? We spent $200,000 for those" last year, he said in the June 6 NationsBank Times.

Even the newsletter is pitching in and saving money. Now, it's printed on lighter-weight paper and shipped via two-day delivery rather than overnight for a savings of "several hundred dollars," said an editor's note.

NationsBank's plan to save $100 million means a cut in overhead of about 4.2 percent, based on 1993 expenses of $2.39 billion. The 1993 expense figure excludes total salaries of $1.9 billion.

NationsBank, parent of Maryland National Bank and the largest banking company in the state, joins a number of other major banking companies seeking ways to cut costs by measures ranging from closing branches and firing workers to con- solidating computer systems and sending fewer letters via overnight delivery.

Already this year, Fleet Financial Group Inc. of Providence, R.I., cut 21 percent of its work force, or 5,500 jobs, to save $300 million a year. And U.S. Bancorp, Portland, Ore., is in the process of cutting 10 percent of its work force, or 1,400 employees.

These companies have said they are seeking to reduce expenses to less than 60 cents of every revenue dollar, from an average of 61.3 cents in the first quarter, according to Keefe, Bruyette & Woods Inc., a firm that compiles statistics on banks.

NationsBank in the first quarter spent 61.3 cents of every revenue dollar on overhead, an improvement from 63.2 cents a year earlier, according to Keefe, Bruyette & Woods.

"That's not out of line, but banks have to be under 60 to be considered good at expenses," said bank analyst Moshe Orenbuch of Sanford C. Bernstein & Co.

Although NationsBank's plan is still informal, Mr. Orenbuch raised his 1995 earnings estimate 10 cents a share, to $6.95. Last year, the bank earned $5.78, up from $4.60 a year earlier.

Mr. McColl said part of the bank's expense problem is because there's one copying machine for every 10 employees in the 60,000-worker company.

In addition, each of the company's 19,000 officers spends $41 a month on overnight mail, for a total of nearly $800,000 in special deliveries each month.

And then, there's those phone calls. "If we cut eight seconds off each long-distance telephone call, we will save $1 million a year. We spend a fortune on conference calls in which people sort of mill around on the phone," said Mr. McColl.

Mr. McColl said he's doing his share to save money by getting better contracts on supplies and services from NationsBank's 50 largest vendors.

To monitor the company's progress, Mr. McColl recently told his 800 senior managers that their expenses for travel, overnight mail, supplies and telecommunications will be tracked each month.

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